I just called the oil company to ask how many of my 137.5 mineral acres out of a 550 acre lease are pooled in each unit which has 320 acres in one and 309.6 acres in the other . This is what she sent me…(1/3 x 1/4 x 1/5 x 251.6/320) = .01310416 RI and (1/3 x 1/4 x 1/5 x 224/309.6) = .01205857 RI. I haven’t a clue as to what these figures represent. Can someone answer my original question to the oil company as to how many acres out of my 137.5 are going into each unit? Thank you.
The oil company expressed your interest as a percent of production from each unit. So you'll receive 1.310416% of the total production from unit 1 and 1.205857% of the total production from unit 2 (less any costs that the oil company may have a right to deduct).
I don't know what 1/3 represents, but I'm guessing the 1/4 in their formula is representative of your 25% interest in the minerals (137.5/550 acres).
The 1/5 in the formula may represent royalty percent. Do you know if you have a 20% royalty on your lease?
It looks like the first unit has 251.6/550 gross acres and the other has 224/550 gross acres. If that's the case 475.6/550 gross acres have been unitized (which means 118.9 of your 137.5 net mineral acres). Hope this helps.
Hello Jason and J Michal,
Thanks for the informative discussion. We just learned that our 2,000-ft and less depth lease for a quarter section is now unitized. My question is if future wells greater then 2,000 feet depth in the unit (I’m assuming for a Section sized Unit) hold the lease by production (HBP?) for our shallow lease even if shallow wells in the whole a Section/Unit get plugged? And if we can participate at greater depths in the rest of the unit or do we only get the same interval of to a maximum of 2,000 ft bgs (I know it’s probably in my dreams, but just checking!).
I have some unitized royalties already and they spell out the intervals and formations in the check statements so, you can tell I’m more paranoid about the HBP status…
Thanks!
Ralpr
Thank you, Jason., for your reply., it helped a lot but I do have another question. There are 4 wells that each comprise a 309.6 acre unit and 4 wells that each comprise a 320 acre unit. Is that all still going to be figured the way you put it? Yes, our lease shows we have 20% and the 1/3 means there are 3 of us siblings that share in the 137.5 acres.
J. Michal